DENGFENG, China (Reuters) — Huang
Xingguo took a job as a cashier at a new Walmart store in his
hometown in southern China for a steady paycheck and the prospect of
upward mobility after a string of sales jobs and a run as a day
trader.

Five years later, he has landed on the frontlines of China's labor
rights movement, an unlikely leader of several dozen workers seeking
better severance pay after the store in the Hunan province city of
Changde announced last month it was closing.

It's not the biggest labor dispute China has seen in a recent surge
of activism that has included factory strikes involving thousands of
workers, but experts say it's among the more significant.

In China, as in other countries, Wal-Mart Stores Inc has figured
prominently in the debate over worker rights. Unions first opened at
its stores in 2006 during a major government-led drive to unionize
private companies. The Chinese government used Wal-Mart as a fillip
for greater unionization at foreign firms.

The Changde case would not just set a precedent for Wal-Mart, but
for other foreign companies seeking to restructure their operations
in response to a slowing Chinese economy.

Worker protests are common in China, but leaders like Huang are not.
Huang is chairman of the state-backed union at Walmart store No.
2024, and was democratically elected to the post, which makes him
even rarer. Because Huang is a union branch leader, the case is also
a challenge to the world's largest and China's only legal union, the
260 million-member All-China Federation of Trade Unions (ACFTU).

Over the past several years, China's union has sat on the sidelines
as workers, emboldened by a demographic shift that has led to a
shrinking labor pool, have become more knowledgeable about their
rights and proactive in using both collective action and the legal
system to protect them. The ACFTU has typically done little to
protect the rights of laborers in disputes, despite a mandate to do
so, experts and workers say. Most union branch bosses in China are
hand-picked by management.

Last week, about two dozen lawyers, scholars and labor activists
brought Huang and three of his colleagues to discuss the case for
two days at a hotel in Dengfeng, Henan province — a location one of
the organizers said was chosen because it is far from the spotlight
of Hunan.

"This case is significant because he (Huang) is an
inside-the-system, legal union chairman," said Wang Jiangsong, a
Beijing-based labor scholar who was at the meetings. "It's a very
valuable case."

GIVE THEM RESPECT

Short, with a buzz cut and a round face punctuated by a goatee beard
and rectangular glasses, Huang, 42, is unassuming and says he was
motivated to fight Wal-Mart because it was the right thing to do.

After receiving a degree in Chinese from a university in Hunan,
Huang worked for a state-owned general merchandise company for six
years, advancing to middle management. He and others were bought out
in the late 1990s amid China's state-owned enterprise restructuring
campaign and he went into pharmaceutical sales, bouncing between
companies.

It was as a sales team leader that Huang says he learned the secret
to good worker-management relations. "In the process of organizing
these people I learned that only if you think about them and think
about their interests will the group have cohesion," he told Reuters
on the sidelines of the meeting in Dengfeng.

In February 2009, Huang started work at the new Walmart store in
Changde. Beginning at the cash register, Huang moved up and
eventually became an administrative manager. By 2011, he had joined
the union committee as a vice chairman and was sent on a training
course on the union's role that was run by the provincial ACFTU.

"This was the first time I really understood what the union
organization was about," he said. "After that training I felt that
the union had a bigger mission and responsibilities."

In early 2013, he was unanimously elected chairman of the store
branch of the union.

MAJOR CHANGE

But the Changde Walmart was flailing, according to Huang. Sales went
from weak to worse and foot traffic was thin, he said, adding that
the number of staff had more than halved to under 150 by early this
year.

Raymond Bracy, head of corporate affairs at Walmart China, said the
company schedules and manages labor at stores worldwide to match
store traffic. "Sometimes, these actions allow us to keep the store
open. In Changde, it was not enough to keep the store open," he
said.

In late February, Huang said Wal-Mart offered him a promotion to a
job in the Hunan capital of Changsha on condition he would agree to
help make an upcoming, but unspecified, "major change" at the
Changde store proceed smoothly, he said. He feared the store might
be slated to close.

If Huang was offered a promotion and a move to another store, Bracy
said, "he was no doubt viewed as a capable associate who had the
potential to contribute in another role".

On March 5, Wal-Mart announced the store would indeed close two
weeks later.

"I knew I needed to help the workers," Huang said. "I knew that if I
didn't, I would not be able to forgive myself."

He turned down the job in Changsha and started mobilizing the union.
The workers were unhappy that there was no prior consultation before
the store closure was announced. They also took issue with the level
of compensation Wal-Mart was offering those who decided to take a
buy-out, arguing they were being dismissed illegally and deserved
more.

Undergirding their displeasure, Huang said, was the feeling that
Wal-Mart had not given workers their due respect. Ironic, he noted,
as one of Wal-Mart's self-proclaimed core values is "respect for the
individual".

Several rounds of consultation between the union and the company
have failed to end the disagreement. Workers temporarily blocked
Wal-Mart from clearing the store of goods, and asked the government
for backing. The union is considering taking the case to formal
arbitration.

"The reason Wal-Mart is holding on, even to the point where their
expenditures have surpassed what the workers in this case are asking
for, is because they do not want the way the Changde Walmart
situation is resolved to become a precedent," said a scholar
involved in the case who declined to be identified because of her
close ties to the ACFTU.

Wal-Mart said in October it planned to close 15-30 China stores
through 2016 while opening up to 110 and creating nearly 19,000 jobs
as part of efforts to revitalize its business. It has around 400
stores in China. In the Changde case, the company had "met
obligations the law requires", paying workers whose contracts
expired based on the number of years of service, Bracy said.

The AFL-CIO, the United States' biggest federation of unions, said
it "supports the demands of Chinese workers" in a statement about
the case on its website on March 28.

THE SAFE CHOICE

Over two days at the hotel in Henan, lawyers, scholars and NGO
experts debated the legal merits of the case and offered advice for
navigating what are essentially uncharted waters for a local union
branch.

China's unions are fundamentally weak, said the scholar with ACFTU
ties. Its mandate is to protect the interests of the nation — or
government — above those of the workers. "When there's a conflict
they have to protect the former," the scholar said. "It's the safe
choice."

In a country where the right to strike is not legally protected,
labor organizing is a risky business. The government puts a premium
on maintaining a stable, investment-friendly environment.

A Shenzhen court on Friday convened a second hearing in the case of
Wu Guijun, a former furniture factory employee who took part in a
May 2013 protest over the plant management's refusal to discuss
compensation for workers affected by the factory's impending closure
and relocation.

Wu, who had been elected as a worker representative but had nothing
to do with the official union, was charged with gathering a crowd to
disrupt public order, and detained. The case is being watched as a
barometer for the government's waning tolerance for strikes.

Friends have called Huang to warn him to back down for his own sake.
But union leaders from other Walmart stores in China have also
called to learn from the situation in Changde.

Huang is under no illusions.

"In terms of the protection of collective rights in this case I'm
not optimistic. Nor am I optimistic about the future work prospects
for those of us who are leading this effort to protect our rights,"
he said.

"But we have no regrets. At least we can tell future generations,
our colleagues and our friends that we did something in good
conscience, and it took a lot of guts."